3 ways to cut your software development cost by 50%

Faced with the economic crisis we all become more cost-focused, whether we like it or not. It’s common knowledge that more and more companies are in for heavy cost-cutting operations. On the other hand, we all know that we will have to invest as well. Without new developments, there is no competitive advantage, which makes both today and the future insecure. Therefore, even today clever investments will be needed. So, what about investing for half the price? In this article, I will describe three ways how you can decrease your software development cost up to 50% (or maybe even more) without any loss of core functionalities.

Save by cutting out the toys

Recently, I have found an external source, the “Agile time to market sheet“, that proved a much longer existing feeling. Based on my personal experience I feel confident in saying that the functionalities requested for most software development projects are dramatically over-exaggerated. People always want to have everything, but in general, they tend to use about 50% of the functionalities provided to them. In fact, this means that about 50% of the requested features are so-called “nice-to-haves” or “democratic” agreements as a result of negotiations: “you will get that toy if I can get this one”. This means you can easily cut about 50% of not needed, but often requested functionalities.

These “toys for boys” are often hardly used and extremely complex and therefore expensive to be realized. By getting rid of the “fancy toys” you can save a lot of money without touching the core functionality of the application. Hardly anybody will notice. That’s why you should ask twice whether certain functionality is really needed.

Save through Agile development approach

Unfortunately, still, most of the software projects follow the so-called “waterfall” methodology. This means that we first specify our needs, then we select a company to develop the application and the software company builds the application. On many occasions, several months later, we realize that we did not get what we wanted. In my post Successful outsourcing needs client’s trust I already showed what can happen if client and software company do not understand each other.

To prevent this from coming, we prefer to use an Agile approach. In close cooperation, the client and software developers define the needs and in an iterative and interactive way, they develop the requested software solution step by step. In a fixed time period new releases with new functionalities are available as a working application. Thanks to the interaction, the client can directly decide what functionality is really needed and he is able to set priorities for the development team. In this way, the focus is shifted on essential functionality rather than on “gizmos”, which will again save development costs. Please have a look at the article: “Why incremental development is better – An ROI perspective”, which is really a valuable source of information.

Consider nearshoring or offshoring

A very important decision is whether you will “make-or-buy” the solution. Do you want to hire the developers yourself or will you decide to look for a software vendor? If you consider outsourcing the software development also consider looking for software providers in Eastern Europe, India and other nearshore and offshore destinations. By doing this you will be able to further reduce the cost.

Conclusion

In my opinion, it is quite easy to reduce software development costs significantly and in the long run, it will ensure that a lot more projects will still be attractive from the financial point of view. Besides, it will enable companies to continue investing in these hard times.

On the other hand, you should also be aware that outsourcing, whether this is on-, near- or offshore, is not necessarily easy. Your organisation needs to be ready for it. Besides, you will have to arrange proper demand management. If you don’t organise this in a good way, you will never get what you are looking for and you won´t be able to achieve the suggested cost reduction.

Look for the proper partner to guide and support you!

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Peter Horsten

VP Software Development Europe for Aspire Systems. Sociologist and electrotechnical engineer, a great combination that stimulates him to look for the best working software solutions for clients. Passionate about converting great ideas into new solutions. Married and a proud father of 3 great sons. Training for and participating in triathlons/runs to stay fit.

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